Making Tax Digital timeline

Making Tax Digital (MTD) is part of the Government’s plan to modernise the UK tax system, making it easier for people to get their tax right. It means individuals and businesses will need to use MTD-compatible software to keep digital records and submit returns.

In April 2022 MTD became mandatory for all VAT registered businesses. The next phase, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) was delayed to 2026 and will affect all self-employed people and landlords earning over £50,000 a year.

Make sure you’re prepared for what’s ahead with our timeline of important changes.

A closer look at key Making Tax Digital dates

April 2019: MTD for VAT - over £85,000 threshold

MTD is introduced for all VAT-registered businesses with a taxable turnover of over £85,000. Businesses in this category must start keeping digital records and submitting returns to HMRC using MTD-compatible software.

April 2021: Digital links

Digital links become mandatory for MTD for VAT. A digital link is a data transfer within and between functional compatible software — for example, adding VAT inputs and outputs to a spreadsheet and using a cell formula to calculate the totals. Manually copying and pasting data does not count as a digital link and is no longer allowed under the government’s MTD rules.

April 2022: MTD for VAT - all VAT-registered businesses

All VAT registered businesses, regardless of turnover, must sign up to MTD for VAT and follow the rules for submitting returns.

April 2022: MTD for ITSA pilot scheme

HMRC begins its MTD for ITSA pilot scheme. Xero launches a beta programme to test their MTD for ITSA solution with a select group of Xero accountants and bookkeepers. Find out how to join.

April 2026: MTD for ITSA – £50,000 threshold

Making Tax Digital for income Tax Self assessment (MTD for ITSA) comes into effect. Sole traders and landlords with a total annual income above £50,000 need to use MTD for ITSA compatible software to keep digital records and file returns.

• You’ll need to send quarterly updates of all business income and expenditure to HMRC, as well as an End of Period Statement (EOPS) at the end of your fourth quarter.
• You’ll also need to submit a Final Declaration with details of all other taxable income by 31 January every year.

Make sure you have HMRC approved software in place before April 2026 and ask your software provider how to sign up for MTD for ITSA. Your accountant or bookkeeper will be able to help you with this.

April 2027: MTD for ITSA - £30,000 threshold

Sole traders and landlords with a total annual income above £30,000 need to use MTD for ITSA compatible software to keep digital records and file returns.

If you want to learn more about Making Tax Digital and prepare for the next stage, visit our Making Tax Digital for Income Tax Self Assessment resource hub or our Making Tax Digital for VAT resource hub for accountants and bookkeepers or small businesses.